Woolas has a reputation for bucking the national trend; in 2001 and 2005 he increased his majority. The man who presided over last year's farcical Gurkha climbdown remains vulnerable, though, in a constituency covering both the affluent middle-class Saddleworth and the 'inner-city' deprivation of neglected Oldham.

The fate of Oldham matters: it's a testing ground for New Labour's multicultural agenda. Critics look back to 2001, when its race riots made national news. Nine years later the town remains divided. Community tensions are never far away. But progress has been made and, politically, neither candidate is keen to talk it up as a huge problem.

As immigration minister, Woolas talks about Oldham teaching the government about the "realities of immigration and the need for integration". As a local councillor - the Lib Dems control the local authority - his main challenger Elwyn Watkins is also reluctant to talk up the problems. "We were certainly not perfect but we've improved a whole load," he says.

Instead the immigration issue is addressed indirectly: the focus is on the national problem, helped by Woolas' huge position of responsibility in the Home Office. His points-based system won plaudits from the right-wing media at the time, but Watkins is happy to flag up wider concerns.

"When he first came in he talked tough, but it doesn't seem as though much has changed," he says. "People are saying well how come as an island we can't control our borders?" It's a very deft way of speaking to the white Oldham which feels left behind, without directly addressing their grievances in mainstream debate.

Racial politics is Oldham's biggest taboo. Such are the sensitivities that even the lowliest campaigner from all parties won't talk freely unless they know they won't be quoted. Rest assured all are privately assessing the impact of the Asian vote and the role their highly politicised community will have in the election.

Publicly, though, there's a reluctance to confront the unpleasant side-effect of such clearly-defined communities living close together. Overt racism, built more on resentment and half-understanding than bigotry, lingers here like an unpleasant smell. For the candidates in the 2010 election, skirting around the issue is about as good as it gets.

There is one exception. In Kashif Ali the Conservatives have chosen a born-and-bred Oldhamer from the Asian community. His background as a barrister, who has worked at the international criminal court in the Hague, marks him out as an out-of-the-ordinary individual. He happily spouts the party line on everything from the economy to the Middle East. At a hustings in Saddleworth, many said they warmed to him as the event continued. He received warm approval when he told the Tory-squeezing Lib Dems "it's votes, not bets, that count". His real effect, of course, could be on that Asian vote.

The impact he will have on election night is hard to understand, but it could prove decisive. Ali could alienate as many white voters as he wins from the Asian community. But if most of the votes he steals are Labour, not Lib Dem, Woolas' majority could be deeply imperilled. Cynics might even suggest the Tories backed him to boost the Lib Dem vote. His presence makes the contest harder for Woolas. It certainly makes the result harder to predict.

Battle for the estates

There was no sign of immigration as a big concern among voters on the doorstep in the Holts estate, a deprived area of Oldham I toured with Woolas yesterday. Ten years ago, I was repeatedly told, the area was much worse; a vicious circle of anti-social residents had dragged it down. The council was even mulling bringing in the bulldozers. After much hard work, Woolas and the voters sang to each other a constant refrain: "It's better than it used to be."

Concerns remain. The communal parts of council housing stock were frequently full of litter, with untidy, unkempt gardens the norm rather than the exception. But there were no syringes in sight and the residents seemed happy to talk to Woolas. Some had not heard of Gordon Brown or David Cameron; they didn't feel they knew enough to vote. Others broke the stereotype, revealing a deep engagement in local housing issues. There's more to Holts than meets the eye.

Woolas, steering clear of encouraging tactical voting, was happy to defend his record in helping improve the area. "If you have a weak MP, or an MP who doesn't know what he's doing..." There was no need to finish the sentence. The Lib Dems have one of the three council seats in the area, but Labour claims Watkins' party abandoned the estate following recent boundary changes.

Watkins, whose team were campaigning in the more affluent Shaw, nearly choked into his soft drink when I raised this. He said he had leafleted Holts every month and claimed it was the Lib Dem council which had turned it around. Antisocial behaviour is down 45% in the last 12 months; youth graffiti, he said, had been dramatically reduced. "For him to claim credit for that - I'm almost speechless."

Labour campaigners think if they could increase turnout here they would win. Lib Dem activists point to recent local election results to show their progress. In the St Mary's ward, the most deprived part of the constituency, the Lib Dems expect to take four-fifths of the vote.

If that optimistic assessment turns into reality there can only be one winner here. Labour should not be underestimated, though. They have deep roots in these parts. Woolas bumped into none other than the jovial former MP Bryan Davies, a peer of the realm (and Captain of the Yeomen of the Guard), on the campaign trail in Holts. He looked far more at home here than in his ermine.

How incredible, then, that only a few miles away in Saddleworth Woolas and Watkins are vying for the middle-class vote on completely different territory. Forget social housing; at the hustings in Uppermill Watkins' chief concern was the decision to develop the valley's first ever Tesco supermarket. The portentous tones with which this development was discussed were, by contrast, a little farcical. Woolas made clear he opposed it, but defended the national planning framework. Watkins said planners had been "riding roughshod over the council". Locals complained that "ordinary folk" were trying hard to keep their carbon emissions down - "and then we see Tescos burning it all away". Watkins warned: "They'll destroy everything we hold dear." The middle-aged middle-classes trembled in their seats.

Afterwards, the audience members I spoke to said they had been more attracted to Woolas' relaxed style than Watkins' more forthright electioneering. You might have expected the Lib Dems to be in control of well-to-do Saddleworth, with Labour clinging on to Oldham. In both areas, it appears, nothing can be taken for granted.

'A mirror to the country'

Demographically, Oldham East and Saddleworth is close to reflecting the national population balance. It ranges from the extremely deprived St Mary's estate to the fringes of a national park - and holds everything inbetween.

This presents a problem with politicians. How do you go about representing such diverse interests?

Woolas' 13 years as an MP leave him as qualified as any to provide the solution. "The answer to that in political terms is to be very ,very clear that you can't say one thing to one group and another to another," he explains simply. "You have to say what you think and let them judge."

He is a straightforward man, whose frankness is as striking as it is suited to this kind of seat. One voter in Holts told him that she wouldn't be backing Labour because she was "sick of the nanny state", adding: "I just feel you're imposing your will on the people." Woolas told me afterwards he wasn't especially keen on it, either. "The road to hell is paved with good intentions!" he said, grinning. "Our intention is to help people, but sometimes it comes across as state interference. So you have to get the balance right."

Watkins appears to be adopting a different approach to the problem. His catch-all answer is that he is a "local lad" who reflects local views. "If you asked the people in this pub [about Watkins' stance against an illegal immigrant amnesty]," he claimed confidently, "I think 100% of them would agree with me."

It is no coincidence both candidates pride themselves on their independent-mindedness. Being a government minister doesn't seem to stop Woolas: "If there's a conflict between the local constituency and the national policy, the local constituency comes first every time." Watkins can afford to go further. "I've got no pretensions about being a clever clogs down in London," he promises. "If I get given the chance I'd be a good local MP."

Despite that mirror to the country, it doesn't feel as if the dynamics of the national campaign will have much of an impact here. Nick Clegg's surge in popularity is not making the same sort of splash as it is in crucial Lib Dem-held seats like Cheltenham. Instead the biggest consequence of the bigger political picture is the fall-out from the expenses scandal. "Good God!" one voter thundered after the Saddleworth hustings. He had just found out no-one had asked a question about allowances.

"On the doorstep I'm getting it in the neck because of his expenses," Watkins says. The Telegraph reported Woolas had claimed for items including a pair of women's shoes and a bottle of nail varnish. "People don't forget these sorts of things," his challenger added.

He has questions of his own to answer. Labour activists appear baffled by his professional connection with a Saudi sheikh, to whom he provides a mixture of financial and consultancy advice. A raft of allegations about improper payment of his volunteers have been suggested but none have yet gathered real traction. Watkins said he had received a letter from HM Revenue and Customs confirming "I've been cleared of any wrongdoing".

One thing is certain: in this closely-fought contest the candidates gave up not attacking each other's credentials a long time ago.

Their quarrels are a vital ingredient in the stormy mix that is the Oldham East and Saddleworth race. But it's only when combined with the potent mixture of the seat's ethnic tensions, the struggle for control of its sink estates and the desperate wooing of the middle classes that the full cocktail emerges.

There's no doubting the Lib Dems are more confident than Labour. Woolas' uncertainty about the end result appears a reflection of his experience - a veteran status which could yet help him survive the biggest political challenge of his career.